London supply spurt putting a damper on operating performance

Pullman London St Pancras Hotel, UK. Photo credit: AccorHotels Group.

STR data showed negative overall performance at London hotels in January, while Berlin saw a strong increase in performance.  

January reflected the same performance results London's market has seen in the past few months. The historically slow month did see a 1.3-percent increase in ADR to £129.23 for the 15th consecutive month and a 0.3-percent increase in RevPAR to £90.21.

However, a 3.0-percent supply growth pushed occupancy levels 0.9 percent lower than recorded in the same period last year, dropping to 69.8 percent. These levels also decreased despite the 2.0-percent YOY increase in demand. 

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London hasn’t been showing strong performance in the past few months due to the rebounding pound. Occupancy levels dropped 0.5 percent to 77.4 percent for seven straight months until the end of 2017 although ADR increased 3.6 percent YOY each month last year to £92.32. RevPAR also grew 4.1 percent to £71.49 in response.

Berlin, Germany reported successful performance growth in January 2018, compared to London's declines, according to an STR report. However, the increased levels reached in Berlin were still no match for London's results. 

RevPAR has continued to increase for the past nine Januarys in Berlin, reaching €50.05 after a 2.0-percent boost. The 4.3-percent rise in demand kept the city's numbers afloat, especially from the travelers who attended Berlin Fashion Week and International Green Week Berlin. 

The events also helped Berlin achieve a minor 0.9-percent boost in occupancy to 59.2 percent, despite the 3.4-percent rise in supply. In response, ADR grew 1.1 percent to €84.60.  

These results follow the strong overall performance Europe experienced in 2017 across all key metrics. Hotels in the region reported a 2.4-percent increase in occupancy to 71.9 percent, which pushed ADR levels up 3.1 percent to €110.51 and RevPAR levels up 5.6 percent to €79.46.

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